WASHINGTON, D.C. – The Institute for Supply Management (ISM) has released its highly anticipated December 2024 ISM Supply Chain Planning Forecast report, offering critical insights into the divergent growth paths of America's manufacturing and service sectors.
Manufacturing: Steady Recovery with Improving Profit Margins
The report indicates manufacturing revenues grew 0.8% in 2024, slightly below May's 2.1% projection but signaling continued recovery. For 2025, ISM forecasts 4.2% revenue growth, with 60% of respondents expressing optimism about expansion.
Key manufacturing findings include:
- 10 of 18 tracked manufacturing industries reported revenue growth in 2024
- Capital expenditures increased 5.2% in 2024, with another 5.2% growth projected for 2025
- Prices paid rose 3% in 2024, with a similar increase expected in 2025
- Employment is projected to grow 0.8% in 2024
Tim Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted: "Manufacturing purchasing and supply executives expect overall growth in 2025. They're optimistic about first-half business prospects and anticipate accelerated growth in the second half."
Service Sector: Sustained Expansion with Slightly Lower Capacity Utilization
The service sector reported stronger-than-expected 3.7% revenue growth in 2024, surpassing May's 2.9% forecast. All 18 service industries reported growth, demonstrating broad-based expansion.
Key service sector metrics:
- Capacity utilization declined slightly to 87.4% from 88.6%
- Capital expenditures projected to grow 5.1% in 2025
- Prices paid increased 5.2% in 2024, with 5.3% growth expected in 2025
- Employment projected to grow 0.8% in 2025
Steve Miller, Chair of the ISM Services Business Survey Committee, stated: "Service providers remain optimistic about 2025, anticipating continued growth and increased capital investment despite slightly lower capacity utilization."
Economic Outlook: Dual Engines Driving Growth
The report paints a picture of an economy powered by two distinct engines: a recovering manufacturing sector and an expanding service sector. Both face unique challenges:
- Manufacturers must navigate raw material costs while increasing productivity
- Service providers need to optimize operations amid competitive pressures
- Both sectors face tight labor markets with 0.8% projected employment growth
This bifurcated growth pattern suggests policymakers may need targeted approaches to support both sectors' continued development while addressing their distinct challenges.